How Soon After You File Will You Know if the IRS Chooses You for an Audit?

by Lee Nichols

Keep your tax records for at least six years.

While it is unwelcome news for most, the truth is that the IRS typically has up to three years to select a return to audit. However, if the agency suspects you of committing fraud to prevent paying owed taxes or you did not file a return, there is no time limit and you could receive an audit notice after three years. According to the IRS, most audit notifications occur within the first two years after filing.

Audit Notification

You will receive notice of an audit through the mail. If an agent contacts you by phone, the agency must send a letter confirming the phone notification. The Internal Revenue Service will not send notification of an audit by electronic mail. If you receive an email requesting information for an audit, it is a scam that is trying to get your personal information. Forward the email to phishing@irs.gov. Include the email headers by clicking "View" in your email program and selecting "Headers." Do not open any links or attachments in the email and do not send a reply to the email.

Computer Scoring

The IRS uses a computer method for scoring returns. The method compares your return with the returns of others in the same area and industry as you. If your score indicates that you have unreported income, the computer flags your return and an agent will review it. Some reviewed returns are selected for audit. Alternatively, the agency might select your return by chance and send you notice of an audit.

Audit Flags

While the computer program provides a score for your return, IRS computers also look for certain indicators when flagging returns for audits. They compare the information on your return with information supplied on other returns. For example, if you state income of $10,000 from a Form W-2, but your employer reports wages of $20,000, the computer will highlight your return for an agent to look at it. You might receive notice of an audit just because of your industry classification. According to Fox News, the IRS chooses certain industries each year and selects returns for no other reason than the filer works in that industry.

Audit by Mail

Mail audits consist of the agency sending you notification that requests documentation verifying claims on the return. The audit-notification letter explains how the IRS feels your return was in error and provides the amount you owe based on its own calculations. If you agree with the error, simply pay the listed amount. If you disagree with the IRS' determination, send your documentation to the address listed and wait for further instructions from the agency.

In-person Audit

In-person audits are typically more in depth than mail audits. In this kind of audit the IRS will request that you bring your documentation to an IRS office and, according to Inc., meet with you at your business if the audit is on your business return. Your notification letter will give you the list of documents that the agency wants to see, the name of the agent assigned to your case and a deadline to contact the agent. If the agency selects you for an in-person audit, try to have all of your documentation together before your first appointment to speed the audit process.